(Photo : SuhasforVA-X)

U.S. Congressman-elect Suhas Subramanyam has expressed his opposition to the imposition of tariffs on India, warning that it would result in a trade war between the two nations.

Mr. Subramanyam's comments came amid the likelihood of higher tariffs on Indian exports by the new Trump administration.

"I don't support (imposing) tariffs on India. I think that would be really bad. It would lead to a trade war. And I don't think it's good for either country," Mr. Subramanyam told in an interview. 

Before his election as U.S. President, Donald Trump criticized India's tariff system and suggested imposing reciprocal taxes on countries such as China and India.

There's a lot of businesses that do really great work in India and a lot of Indian companies are expanding to the US. So the more our countries work together economically, the stronger we'll be, Subramanyam said.

Getting ready to be sworn in as a member of the House of Representatives, which plays a key role in shaping the foreign policy of the United States, Subramanyam said he wants to be someone who promotes democracy around the world. India, for instance, is one of the largest democracies, and the US-India relationship is very important to both countries, he said.

Subramanyam, 38, is the sixth Indian-American elected to the US House of Representatives.

US-India Trade Dynamics

The US emerged as India's biggest trading partner in 2022-23 on account of increasing economic ties between the two countries. According to the provisional data of the Commerce Ministry, the bilateral trade between India and the US increased by 7.65% to US$ 128.55 in 2022-23 as against US$ 119.48 billion in 2021-22. Key exports include technology, pharmaceuticals, and agricultural products, while India exports goods like textiles, machinery, and chemicals to the U.S. However, trade tensions have emerged, particularly over tariffs and market access.

 In 2019, the U.S. removed India from its Generalized System of Preferences (GSP), affecting Indian exports.

Additionally, both countries have engaged in disputes over tariffs on products like steel, aluminum, and agricultural goods. These issues have fueled discussions on the impact of tariffs on bilateral trade and economic growth.

Tariffs have constrained India-US trade growth

Indian exports to the US face low tariffs. However, the tariff rates India faces are higher than average US import tariffs. According to a 2016 study by Fukase and Martin, export products from India going to the US faced an overall tariff rate of 2.7% whereas US average tariff rates were only 1.3%. As an example, US tariff rates on Indian textile products average 9.1% whereas import tariffs on NAFTA and many African country textile products is zero.

US goods face high import duties in India. The average tariff rate for US exports to India is 9.9%. This average rate is lower than India's average tariff rate of 13.8% but only because the 4.9% import tariffs on US transportation equipment lowers the average. In other import categories such as agriculture and processed foods, Indian import tariffs on US goods are considerably higher.

The Risk of a Trade War

A trade war occurs when countries impose tariffs or other trade barriers on each other in retaliation for perceived unfair trade practices, leading to escalating tensions. A trade war, initiated by the United States, would do serious damage to the global economy as protectionist actions escalate. Countries imposing tariffs and countries subject to tariffs would experience losses in economic welfare, while countries on the sidelines would experience collateral damage. A notable example is the U.S.-China trade war, where both nations imposed tariffs on billions of dollars' worth of goods, resulting in economic strain and market instability.

Suhas Subramanyam has warned that imposing tariffs on India could have similar consequences, destabilizing the growing U.S.-India relationship.